The used-car warehouse concept is said to have particular economies over a traditional dealership and is designed to win back, for car retailers, much of the used-car business that has been lost by dealers to private sellers due to the success of websites such as Carsales and CarsGuide.
Before Carsales became entrenched with private buyers, following the loss of newspaper classified advertising, car dealers handled 60 per cent of used-car sales. But the attraction of private sellers and buyers using third party websites has seen that dealer share slip to 40 per cent.
AHG, which promised shareholders a significant move into the fixed-price used-car warehouse concept at its annual general meeting last year, has now confirmed three east-coast locations, plus a second outlet in Western Australia, will be operating before the end of this year.
It has also advertised for staff to man the new outlets.
At its annual general meeting in December, the company said its Easyauto123 was already entrenched in the private-to-private (P2P) automotive market that was “estimated to be in the order of $15 billion annually”.
AHG told shareholders that it was well-placed to increase its share of this revenue with its national used-car warehouse strategy and digital disruption strategies.
The company opened its first Easyauto123 outlet in the Perth northern suburb of Edgewater early last year and operated it as a trial. Reports from inside AHG indicate that it was a case of “ironing out the bugs” before it could be used as a template for future outlets.
Now that Perth’s Edgewater has proved the concept, AHG has confirmed the next outlet will be in the western Sydney suburb of Seven Hills, probably by April.
That will be followed by a new outlet in Melbourne and a second warehouse in Perth by the middle of the year.
The Melbourne site is a warehouse in the near-city western suburb of Brooklyn.
AHG is also working in the southern Perth suburb of Canning Vale where it has taken over the lease of a former Coles Myer distribution centre. Coles Myer moved its distribution centre from Canning Vale to the Perth International Airport district about four years ago.
The group’s fifth store will open in the second half in Nudgee in Brisbane’s east near the airport .
AHG’s Tony Salerno, in an exclusive statement to GoAutoNews Premium said that the warehouse model is proving to be less capital-intensive than the traditional mix of new and used cars found in a dealership and that the return-on-capital is realised in a much shorter timeframe.
“A new car dealership, with used cars as part of the business, is a very significant investment,” he said.
Mr Salerno said: “The Joondalup warehouse was successful within a matter of months and we believe we can replicate that success by identifying the right locations.
“Each of the sites has high visibility with easy access and is positioned within great catchment areas.”
The Easyauto123 model is based on a selection of hundreds of fixed-price vehicles with a 48-hour money-back guarantee.
It does not use sales consultants. AHG said customers “are greeted by a product specialist whose remuneration is based on customer satisfaction rather than a sales commission”.
AHG said that the warehouse model attracts customers who would not normally shop for a vehicle at new-car dealerships.
“These are customers who would not normally shop at a traditional used-car yard or look at a private sale.
“We are very confident that this will not cannibalise used-car sales at our existing dealerships,” Mr Salerno added.
By Neil Dowling